NEW YORK (CNN/Money) -
As Independence Day rolls around, are you free? Financially, that is.

The meaning of financial independence can be just as difficult to nail down as figuring out what is the perfect level of rich.

For some, it may mean not having to live with mom and dad. Others may describe it as being able to eat as much caviar as they please.

Ultimately, financial independence boils down to one thing: freedom of choice.

"Financial freedom is so intertwined with what a person wants to achieve in life," said Ron Pearson, a certified financial planner with Beach Financial Advisory Service. "It doesn't necessarily mean never having to work again, but instead has more to do with realizing your own dreams."

Maybe you had a fantasy of "making it" as a rock star but took a corporate job to pay the bills. Or perhaps your parents pushed you towards a career in law when you really love the arts.

With some financial planning, you can make the daily grind pay off and get back on the fast track to getting where you want to go.

Step 1: Set the goal

"You have to understand why you want money," said Stacy Francis, certified financial planner and owner of Francis Financial.

She has her clients write down their reasons for wanting money, which helps them define and prioritize their ambitions, she said.

Being crystal clear about what you want puts everything in perspective.

"You might want to buy a new dress, but when you know your priority is to send the kids to college, it makes it easier to make that choice," said Judi Martindale, a CFP in California.

Step 2: Assess the cost

Once you've set your goal, the next step is to figure out what it's going to cost to get there.

If you want to sell your house to live on a beach in Costa Rica, you're not going to have to save as much as if you want to be a jetsetter and keep a home in London.

First, you need to estimate your annual living expenses. For the jetsetter, you need to tally up the cost of two mortgages, taxes, trans-Atlantic flights and other expenses such as food and insurance.

Then, figure out what income you'll have coming in -- retirement savings if you're planning on leaving the workforce, personal savings or earnings if you intend to keep your job.

With those two numbers, you can figure out how much you'll need to achieve your dream.

Calculators can come in handy during this stage of the planning process. These tools can provide a general picture of how long it'll take you to reach your savings goal or how living costs vary from one location to another. You can even see how long it'll take you to become a millionaire.

Step 3: Craft the plan

Then you need to start working towards that goal, and you have the best chance of succeeding if you start out with a solid budget. (For a step-by-step guide to creating a budget, click here.)

"The biggest predictor of whether you're going to reach financial independence is by looking at what you're spending and saving," Francis said. "It's as simple as that, it's not rocket science."

Many people cringe at the thought of budgeting, but it really doesn't take a lot of time or effort to keep track of your expenses.

There's already a written record of items you charge and write checks for, which leaves only cash payments unaccounted for. Once you start monitoring your spending habits, you'll be surprised to see where your money goes.

Ideally, you want to be saving at least 10 to 15 percent of your income, Francis said. She recommends her clients be prepared to replace at least 100 percent of their income when they stop working.

Another way to make budgeting bearable is to break down costs, she said.

If you want to buy a $500,000 house in five years and want to put down 10 percent, or $50,000, you'll need to save $10,000 each year. That sum may seem unmanageable, but if you break it down, it comes to putting away $830 each month, or just over $200 a week.

One of the best strategies for getting ahead financially is to downsize your lifestyle. Losing the second car, or selling your $400,000 house and moving into a smaller condo, can translate into huge savings.

Simpler substitutions go a long way, too.

If you opt for the house brew rather than a specialty frothy drink when you pick up your morning coffee, you can save $800 a year. If you keep doing that for 35 years and invest your savings, you could end up with $150,000, assuming an 8 percent compounded annual return.

You need to be prepared for some tradeoffs, but that doesn't mean you have to deprive yourself of what matters most, Pearson said.

He said one of his clients works a stressful job as a power plant operator, but makes room in his budget for flying, his favorite pastime and a major stress reliever.

Achieving your financial dream doesn't mean you have to give up on your values, either. Last year, Americans reached into their pockets to give about $249 billion to charitable causes, setting a new record.

Pearson said one of his clients, a doctor, has saved huge amounts by living below his means. He's interested in helping the blind, and now that his financial planning has put early retirement on the horizon, he is considering transitioning into the non-profit world, either by setting up a foundation for the blind or by giving aid to organizations devoted to that cause.

If philanthropy is a priority in your life, but you can't afford to make large gift donations, you can find different ways of giving, such as by donating your time to volunteer or charity work.

Whether you want to supersize or downsize your life, get away from it all or see it all, you need a plan to get you there.

There are no hard and fast rules, but a good rule of thumb is to make sure your plan matches your risk tolerance and goals.

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